By Xie Fang
A recent working paper released by the National Bureau of Economic Research (NBER), one of the most prestigious economic research institutes in the U.S., shows that trading with China has a positive effect on the U.S. labor market, the China Securities Journal reported Monday evening.
"There is robust evidence indicating that trading with China is a positive boost to the U.S. local employment and real wages," says the paper.
Instead of focusing on those industries where the U.S. and China are competing with each other, the paper examines the trade relationship between the two countries from a supply chain perspective and takes intermediate goods such as parts and components into account.
The paper finds that the proportion of the intermediate goods imported from China in the total Chinese imports rose from 28.6 percent in 2000 to 37.5 percent in 2014, which means more and more U.S. companies rely on the intermediate goods imported from China to produce consumer products. What's more, these intermediate goods not only raise the productivity of the U.S. firms but also create new jobs.
The paper also reveals that although Chinese imports do exert pressure on the employment in those U.S. manufacturing firms which directly compete with their Chinese peers, these imports in effect expand employment in the downstream sectors.
According to the paper, 75 percent of U.S. workers experience a real wage growth as a result of the trading with China, which demonstrates that most American workers benefit rather than suffering from the trade between the two countries.